This university in Raleigh doesn’t have a single student. Can it really survive?
AI-generated summary reviewed by our newsroom.
- St. Augustine’s is bankrupt, lost accreditation, and has no enrolled students now.
- The university owes about $74 million and lists $426,000 in available cash.
- Accreditation expired May 15 and all students (about five) transferred out this spring.
There’s one university in Raleigh that doesn’t have any students. It’s bankrupt, it has lost its accreditation, campus is empty, and it owes approximately $74 million to hundreds of people and entities.
But it still says it has a future.
That would be St. Augustine’s University, the 160-year-old historically Black university in Raleigh. St. Augustine’s began as a school for formerly enslaved people, and is one of the oldest HBCUs in the South. But this spring, all students — of which there were around five remaining — had to transfer out. Accreditation expired on May 15, after the university abandoned its court battle with its accreditor out of financial necessity.
At bankruptcy court in downtown Raleigh on Wednesday, representatives of St. Augustine’s answered difficult questions from court administrators and creditors about its financial position and how it plans to make good on what it owes.
The university reports just $426,000 in cash.
One thing St. Augustine’s has going for it? Its land. It owns an 105-acre property in Raleigh valued at $200 million. Now, the school is considering selling off parts of that land.
Ciara Rogers, the university’s lawyer, said that — considering the value of surrounding land, the rapid development in the area, new bus lines, and proximity to attractions like the governor’s mansion — “the highest and best use” of the land “is probably going to be development.”
She said she’s seen proposals for different kinds of housing, as well as a proposal for a senior care facility.
Sophie Gibson, the chair of St. Augustine’s board of trustees, described putting her “blood, sweat, and tears” into the effort to turn things around at the university. On the board, which has recently been largely reconstituted, there is an “intention to do things differently” and “stop the bleeding,” Gibson said. In the past, financial malfeasance on the part of university leaders plagued the school’s finances.
The university cited stark decreases in enrollment and the increased market share of other colleges and universities in the area as reasons for its financial decline. No students have lived on campus since 2024.
Though its degree-giving powers are over for the time-being, St. Augustine’s says it one day hopes to pursue reaccreditation and is working to prepare some certification and apprenticeship programs for next fall. It has 25 current employees, and its financial partner Self-Help Ventures Fund, is footing the bill for payroll and other operational expenses. Fewer than five actually work on campus.
Those 25 employees are focused on saving the university and securing its future.
“If dedication alone could get this across the finish line, it would,” bankruptcy administrator Brian Behr said at the hearing — but there are major problems that may require more than that, he said.
Wednesday’s creditors’ meeting and court hearing illuminated new details about the situation at St. Augustine’s.
Will the university pay its debts, including to former students and employees?
“We have no money,” Gibson said at the meeting. At the same time, though, she said: “What I’m trying to do is create a roadmap [so that] we can have a brighter day and make sure whoever is owed their money gets their money back.”
All former employees should file a claim with the court if they intend to try to collect what is owed to them, Behr recommended. And if you have a pension promised to you by the university, Behr recommends hiring a lawyer.
The university intends to pay back all of its unsecured creditors, according to Rogers. Creditors with unsecured claims include the IRS, to which the university owes $14 million, and more than 300 other individuals and entities. Secured creditors have debts backed by collateral or property. That includes the university’s food management service, its IT service, its field turf provider, Nissan, Xerox, Cisco, and others.
That includes other federal agencies, which likely means that the university misused federal grant money, according to Benjamin Higgins, a representative of the U.S. Attorney’s Office.
“The university was on such a consistent decline, and ... you have to have revenue somehow, and they were taking from one [grant] in order to keep operations alive,” Gibson said.
The university’s books and records are not up to date. Leaders are working on hiring an accountant and auditor to get everything in order so that it can file its most recent tax returns and accurately report its situation to bankruptcy court.
What efforts are being made to secure sensitive student data and valuable land and real estate?
Since its hearing earlier this month, which focused largely on the condition of campus, the university has stepped up its security efforts. It used emergency funding to fix broken fences, board up broken windows, and increase security patrols.
The university also must secure personal data on students and employees, both in file cabinets on campus and in digital form in the cloud. It owes nearly $2 million to Ellucian Company, a vendor of student information systems. The university is working on an agreement about how that might be paid.
“We are hopeful that we’ll be able to reach an agreement that is affordable for the debtor, because we do recognize the value of that information and the debtor’s obligation to keep that information secure,” said Rogers.
Judge David Warren of U.S. Bankruptcy Court for the Eastern District of North Carolina specifically mentioned preserving the physical archives at a historic institution like St. Augustine’s.
The university is likely to be back in bankruptcy court on June 30.
